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Figure 21-4
Rollo Company Has Developed Cost Formulas for the Drivers

Question 5

Multiple Choice

Figure 21-4
Rollo Company has developed cost formulas for the drivers of the following production activities:  Driver  Activity  Fixed  Variable  Labour hours  Materials −0−20 Labour hours  Labour −0−10 Machine hours  Maintenance 10,0008 Machine hours  Machining 50,0002 Number of setups  Inspections 30,000200 Number of setups  Setups −0−300 Number of purchase orders  Purchasing 75,0003\begin{array}{llcc}\text { Driver } & \text { Activity } & \text { Fixed } & \text { Variable } \\\text { Labour hours } & \text { Materials } & -0- & 20 \\\text { Labour hours } & \text { Labour } & -0- & 10\\\text { Machine hours } & \text { Maintenance } & 10,000 & 8 \\\text { Machine hours } & \text { Machining } & 50,000 & 2 \\\text { Number of setups } & \text { Inspections } & 30,000 & 200 \\\text { Number of setups } & \text { Setups } & -0- & 300 \\\text { Number of purchase orders } & \text { Purchasing } & 75,000 & 3\end{array}
-Refer to Figure 21-4. The budgeted inspection cost for 20 setups is


A) £175,860.
B) £40,000.
C) £34,000.
D) £30,000.

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